I was watching a news show the other night and a U.S. Senator was asked about the potential reform of the U.S. Tax Code. His response was appalling. He said:

“That will be complicated to unwind, so it will take some time to tackle that.”

What does that mean? It sounded to me like this Senator was only considering ways to tweak or adjust the current tax code. What about some fresh ideas?

Unfortunately the Senator is not alone. In fact, most business owners will take the same approach when trying to address a problem in their business. They will try to fix it by making changes to the current model. But some things aren’t worth the time and effort to fix. It’s often better to simply scrap the old and start fresh.

Brainstorming is not a new concept, but it is still one that is a bit nebulous to most people. The good news is there are lots of ways to brainstorm. As with most things we do in our business coaching practice, we find it best to keep things simple.

A common goal for brainstorming sessions is to come up with new ways to do things. Quite often though, we burden ourselves with the way things are currently done and we try to “fix” the current way of doing things.

So, back to our Senator and the U.S. Tax Code for a moment. Instead of focusing on how difficult it will be to change the current tax code, why didn’t he ask the following question instead:

What if we were starting from scratch?

It is such a freeing question. It takes away the burden of having to adjust what currently exists. If everyone is focused on “starting from scratch” then everyone will also be focused on the end goal.

So if you are struggling to “reinvent” something in your business (or the even the business itself), start with a couple of blank white boards and the question “What if we were starting from scratch?” You might be surprised at what you discover.

One common goal of most small business owners is to grow their sales. The trick is, most aren’t sure quite how to go about doing it.

One of the things we work on in our business coaching practice is to find simple and practical ways for business owners to run their business better. When it comes to sales, the best place to start is with a sales forecast.

Forecasting your sales for the remainder of the year isn’t as difficult as you might think. Here are 5 simple steps to forecasting your sales:

1. Set a goal for total sales for the year. Pick a number that makes sense to you. A quick way to get a starting number is to base it off last year’s figure. Let’s say you had sales of $750,000 last year and you wanted to grow 10% this year. Your annual sales goal for this year would be $825,000.
2. Calculate how much more in sales you need to achieve your annual goal. Subtract your year-to-date sales from your annual sales goal figure from #1 above. So if you had $225,000 in sales in the first quarter of the year, your sales goal for the remaining three quarters of the year would be $600,000.
3. Look for trends in historical sales. Run a few reports from you accounting system that show sales by month over the last 3-5 years (longer if you have the data) and see if you can find any patterns in your sales figures. For instance, perhaps you have some seasonality in your business. Let’s say you find that over the past five years, the month of July has accounted for between 31% – 34% of your total annual sales. You could feel very comfortable projecting July sales this year of 30% of your $825,000 total annual sales goal ($247,500 in this example).
4. Prepare a report with the following four items detailed out by month for the rest of this year: i) list of backlog (defined as orders in process or contracts signed with customers), ii) list of outstanding quotes/bids for new work with an estimated percentage of winning each piece of potential new business, iii) best estimate for how much you would have in sales by month if you didn’t do any marketing (if you’ve been in business at least 5 years, chances are you’d have some level of business if you did no marketing at all this year), and iv) estimate of any “drop-in” or “big” orders your company may get on a regular basis (e.g. every few months or years). Add up the total projected sales dollars from the four items listed directly above.
5. Create a Marketing Plan to plug the hole between your annual sales goal and your projected sales gap (i.e. subtract your answer from #4 from your answer from #2).

You’ll probably be surprised how predictable your sales are when you break them down in this fashion. This also gives you confidence that you know how you’re going to achieve your sales goal, realizing that your Marketing Plan is only one piece of the puzzle.

One of the most vital roles of any small business owner is to make sure you have the right people in your organization. The vast majority of the small business owners we meet, spend too much of their time mired in people situations.

There are lots of “how” questions on the people front. How do I:

- find them?
- hire them?
- train them?
- motivate them?
- pay them?
- get them to take ownership?
- fire them?
- etc.

All of these questions will eventually boil down to one big question, “How do I know if I have the right people in my organization?”

If you’ve ever read the book Good to Great by Jim Collins, then you know there are two questions to ask to help you figure out whether or not you have the right people:

1. Would you hire this person again (knowing what you know today)? AND
2. If the person came to tell you that he or she is leaving to pursue an exciting new opportunity, would you feel terribly disappointed or secretly relieved?

The first question is pretty easy and perhaps you’ve heard it before, but the second question really cuts to the heart of the issue. If your answer is “secretly relieved” with any of your people, my question to you is, why are you continuing to employ this person and what are you doing to get them off your bus (to use the Good to Great term)?

Terminating an employee is one of the most difficult and emotionally-charged duties of any small business owner. No matter how much experience you have, it’s never easy. We have found that by keeping things as simple as the two questions highlighted above, many owners can justify to themselves as well as the remaining team, why someone needs to be kicked off the bus.

One of the findings of the Good to Great research was that there wasn’t a difference in the amount of employee turnover between the good and great companies. What they did find was that the great companies got rid of the people who didn’t fit faster than the good companies. In other words, the great companies were more rigorous when deciding which people to retain and which people to let go.

Nearly every small business owner we come into contact with has people who fit into the “terribly disappointed” and “secretly relieved” buckets. Quite often, the owners are surprised to find out how many folks fall into the “secretly relieved” bucket. And those people have been in those buckets for years. Usually almost since day one when they joined the company.

So let’s make sure I’m communicating effectively. I’m not suggesting that you finish reading this article, pull out a list of your employees and begin chopping heads. What I am suggesting is that you sit down with your current roster of employees and put them into “terribly disappointed” and “secretly relieved” buckets.

If you are having trouble classifying your people, ask one of your “terribly disappointed” people to help you out. Chances are they will have a pretty good feel for who fits where. The next step is to prioritize which of the “secretly relieved” folks you want to address first. Start by asking yourself the question, “If this person were no longer here, how would their duties be divided up by the current staff?”

Quite often we have found that there is often an “addition by subtraction” that happens in many small businesses when it comes to these “secretly relieved” folks. Many of the “terribly disappointed” folks will pick up the slack left and many times they are more efficient without the “secretly relieved” folks around.

If you are having trouble addressing the “secretly relieved” folks, how about giving some thought to the “terribly disappointed” folks and what you are going to do when they leave you for a better opportunity. It’s just a matter of time when you hold on to the “secretly relieved” folks too long. It becomes a big de-motivator for the “terribly disappointed” folks.

We had a client the other day who made a great analogy when it came to understanding the numbers in his business.

If you’ve ever seen the movie The Matrix, early on in the movie one of the characters (Dozer) is looking at a screen with a bunch of numbers and he sees all this activity. The main character (Neo) is looking over Dozer’s shoulder and all Neo sees is a bunch of numbers.

Are you like Neo or Dozer when looking at your financials? Do you see all the activity that goes on in your business, or are you simply seeing a bunch of numbers?

One of your primary roles as the business owner is to understand your numbers. It’s the score card for your business and tells you more than simply being present in the business day in and day out.

You’d be surprised by how many folks are “busy” in their business, but their businesses are not doing well from a profit and cash flow standpoint. It doesn’t have to be that way.

It’s kind of like The Matrix in a sense where Morpheus gives Neo the option of taking a blue or red pill and he’ll be able to see the world differently.

While it’s not as simple as taking a pill to understand the numbers in your business, it doesn’t have to be very difficult either.

The best way we know how to help a business owner understand their numbers better is by having them “present” those numbers on a regular basis.

Most owners we meet will sit down with their accountant at least once or twice a year to have their accountant review their numbers with them. These meetings typically entail the accountant talking for about 75% of the meeting and the owners simply smiling and nodding their heads as things are explained to them.

Unfortunately, if we ask that same business owner a week later what the accountant told them, chances are they would still have a lot of questions. Understanding your numbers is not a spectator sport. You have to get involved!

Think about a presentation you’ve given recently. You probably spoke on a topic where you are a relative expert (e.g. your business). Even with that great knowledge, you probably still spent quite a bit of time preparing for that presentation in the days and weeks leading up to the presentation.

When you have to present something, you learn and retain things in an entirely different way vs. simply listening to someone explain things to you.

So if you’re struggling to see all the activity in those numbers, we would suggest you find someone to sit down with on a regular basis (e.g. monthly) to present your numbers. When I say your “numbers” I’m referring to your monthly Profit & Loss (aka P&L or Income Statement) and Balance Sheet. Click here to view a prior blog posting that goes into more detail about Financial Statements.

An easy person to start with is your accountant or your business coach. The key is to have someone who is knowledgeable about financial statements and how they work so they can answer questions you might have as you stumble through the P&L and Balance Sheet.

Ultimately, we recommend to all our clients to have them sit down and present their numbers monthly to all their employees. We don’t know of a better way to communicate with and get your employees involved in what’s going on in your business in both good times and bad.

Most people have a strong feelings about partners (whether it be in business or in life). In our unscientific survey over the years, we’ve been surprised to find that most people have negative feelings when it comes to partners in business.

In most cases those negative feelings have resulted from one bad experience with a partner in business. That seems silly to us. It’s like having a bad personal relationship with a significant other or spouse and then saying, “I’m never going to get involved in another serious relationship.”

Why let one bad experience with partners hold you back in your business life?

In our business coaching practice, approximately one-third of our clients over the years have involved partnerships/multiple owners. We’ve worked with everyone from husband and wife teams to in-laws to siblings to best friends and everything in between.

Not only have we advised these partners, but Jack and I are also partners in our business. I personally grew up around it with my parents who have run a business together for over 30 years.

So one of the questions people often have for us is, “What makes a good partner?” While I could pontificate on many items that would make a good vs. a bad partner, the basic question you should ask yourself if you have a partner is this:

Does my partner make me AND the business better?

It’s really that simple. If you can answer yes to both of those questions, then chances are you have a good partner. If not, something is definitely lacking.

How can you tell if your partner makes you and the business better? Here are a couple of things to consider. Does your partner:

- challenge you?
- hold you accountable to make sure you do what you say you’re going to do?
- listen to you (really listen to you)?
- communicate with you about the important things in your business?
- focus on what’s best for the organization and not just what’s best for him/her?
- talk about you the same way whether you’re in the room or not?
- tell you what you NEED to hear instead of what you WANT to hear?
- cover for you when the need arises?
- give you a pat on the back when deserved?
- encourage you?
- bring new ideas to the table?
- have fun?

Oh, by the way, how would your partner respond to these same questions about you? Would you be viewed as a good partner?

We contend that a business that has good partners will have more success in the long run than a business that does not have good partners.

We know this from personal experience, both in our business coaching practice as well as in prior companies we’ve owned.

We also see it with our business coaching clients. Even for our clients who do not have partners, one of the things they get from us is that “partner” in the business to help move them forward.

So how is your partnership?

This is a question we hear from many small business owners. Usually this comes up when they are so busy doing the work of their business that they can’t fathom being able to find more time to engage in something like planning.

We contend that much of the reason behind owners not doing proper planning is that they are not really sure how to do it. Perhaps they had some bad experiences with “planning” in a non-profit they’re involved with or maybe they used to work for someone else who spent a lot of time planning and not enough time executing that plan.

While most business owners understand and agree that it’s important to plan their business, it’s often difficult for them to figure out how to plan on a regular basis. We contend that if you as the owner of your business are not taking time to plan, then you are neglecting one of your three key roles as the owner.

Something we reinforce with all of our business coaching clients is that the job of the owner can be summed up in three words:

Plan
Direct
Control

Think about how simple it would make your life if you kept these three words in mind throughout the day. It would make it easier to figure out what you are supposed to be doing on a day-to-day basis and relieve some of the stress and confusion you may currently be feeling.

Hear is a little insight into what we mean with each of these three words:

1. Plan: this is the first role of the owner for a reason. If you don’t have a plan for your business, how can you tell how you are doing? If I asked you how your year was last year, how would you respond? Would you say it was good or not good simply based on growth or loss in revenue or profit? Putting together a plan helps to set the goals and the direction for the organization. That’s true whether we’re talking about a 10-year plan, a 1-year plan, or a weekly plan. Planning is where you set the goals for your organization. These goals should then be broken down into tiny steps to help you reach your goals. This becomes the execution of the plan to achieve those goals.
2. Direct: this covers how you direct your resources to achieve your plan. For most companies, the #1 resource is people. We often hear complaints from owners about difficult or poor performing people. What we often find is that the people are pretty good, they just lack good direction from above. Picture yourself as the conductor of an orchestra with all of the musicians representing your employees. Whether you like it or not, they are all looking to you for direction.
3. Control: this is how you track all the activity in your company. It is typically done through some systematic reporting. It will include such things as your financial statements and other key measurables. For instance, if you are a retail location, you might track the amount of foot traffic by hour. If you are overseeing your sales people, you might track the number of appointments they have on a daily or weekly basis. Basically, anything and everything you can gather to give you a sense for how your business is doing.

These three simple duties should then roll down to other key people in your organization and then eventually to everyone in your organization.

Why shouldn’t everyone in your organization have a plan for what they are going to do? In the short-term, it starts with “What’s your plan today?” That daily plan should fit into a bigger picture and longer-term plan for them and the overall organization.

You as the owner should get fond of asking the following question of any of your people, “What’s your plan?” If they can confidently discuss their plan, their strategy to execute that plan, and plug it back into how it helps the overall organization, your confidence and ability to Direct and Control becomes much greater.

It all starts with the Plan. Chances are if you don’t have a Plan that you’re executing, then you’ll be very busy, but not very effective.

So while many small business owners will ask us, “How do I find time to plan?”, we’ll respond with, “How can you not find time to plan?” What could be more important to both the near-term and long-term success of your business?

As silly as this might sound, many business owners seem to forget the fact that they are in business to make a profit (i.e. make money). Most owners, in fact, don’t have a plan for how they are going to make a profit this year, this quarter, this month. It doesn’t have to be that way.

One of the first things we do with our business coaching clients is to get them thinking about and pulling together a Profit Plan for the next 12 months. The Profit Plan is just what it sounds like: a plan for making a profit (click here to read our blog posting summarizing how to pull together a Profit Plan).

Once your Profit Plan is pulled together, the real fun starts. The execution and implementation of that Profit Plan! As discussed in our prior posting, it’s critical to get other folks in your organization involved so they can help with the execution of this plan.

One of the most important areas for you to focus on is that top line (i.e. the projected sales). What is being done by you and those in your organization to bring customers into your business?

Here are a couple of ideas for how to keep yourself and your organization focused on driving sales into your business:

1. Have a Clear (and Written) Goal For The Number of New Customers: now that you have your Profit Plan in place that shows how many sales in terms of dollars you’d like your organization to have, this dollar figure needs to be broken down into the number of customers required to achieve that figure. For instance, let’s suppose you are targeting $100,000 in new business this year. Will that come from one customer, 1,000 customers or something in between?
2. Break Marketing Activities Into Monthly & Weekly Buckets: marketing is what drives sales. In the end, all you can truly manage is your and your people’s activity. You cannot control who and when someone will actually buy your products and services. So once you have the goal for the number of new customers identified, the question to consider is, “what marketing activities will put us in front of those prospective customers so we can achieve our new sales goal?” Marketing activities basically break down into three categories: i) Short-Term (e.g. referrals, cold calls, direct mail), ii) Long-Term (e.g. networking, writing, strategic alliances), and iii) Passive (e.g. print advertising, web sites, promotional products). Once you’ve picked the strategies that work best for your business, you should put a schedule in place broken into weekly buckets that drive those activities. If you’d like the list of marketing activities or a sample of the schedule to track those activities, send me an email at adams@maximumvp.com and I’d be happy to forward you a copy.
3. Meet Regurlarly To Track Progress: with so much time and effort going into pulling together the Profit Plan, we’re amazed at how many people will then put the plan on the “shelf” and not refer back to it to measure their progress against the plan. Initially we would recommend that you and your marketing/sales team meet on a weekly basis to track the execution of your marketing plan. Is everyone doing what they agreed to do? Are things working as planned or do some adjustments need to be made? While it might be tempting to delay or skip some of these weekly meetings as things “get busy,” we strongly advise our clients to continue with those routines to get themselves and their organization into a better rhythm.
4. Adjust The Plan Sooner vs. Later: just because you signed off on your Profit Plan in December doesn’t mean you shouldn’t look at it again until next December. As I’m sure you can appreciate, plans almost never go according to “the plan” (whether in business or your personal life). The key benefit of putting together a Profit Plan in the first place is to ensure that all the right discussions are happening within your organization and that all your key folks know what needs to be done. Once you and your team get into a rhythm, you’ll find yourself constantly tweaking the execution of your plan throughout the year. For instance, your initial Profit Plan may have called for sending out post cards once a month to generate new leads, but instead of getting a 1% response rate, you actually have received a 10% response rate. Why wouldn’t you want to increase the number of mailings sooner vs. later?

The above outlines the framework for how to drive one of the most important components of your Profit Plan, the top line. Having a plan that is constantly being tweaked and challenged during the execution phase is a key driver to making a profit in your business.

As David Sandler used to say, be a “fuzzy” source for your customers. For those of you not familiar with this terminology, it includes “warm fuzzies” and “cold pricklies.”

Warm fuzzies are those things that make other people feel good. It could be something as simple as a genuine compliment. It could be you sending a personal handwritten note to someone to let them know how much you appreciate them. Or it could simply be an article you find that you think might be of interest to someone. A warm fuzzy is basically anything that will provide that warm & fuzzy feeling

Cold pricklies, on the other hand, are those things that don’t feel so good. It could be a backhanded compliment that sounds nice at first, but it’s really a set up for a zinger to follow. Think Caddyshack and Rodney Dangerfield’s character talking to Ted Knight’s character in the pro shop: “Hey you buy a hat like this and I bet you get a free bowl of soup! (seeing Ted Knight’s character trying on the hat) Oh it looks good on you, though (while making an awkward face). Here is a YouTube link to the 30-second video in case you haven’t seen it before.

While you may not be that overtly “prickly” to your customers, you may do other things that prickle them. It could be that instead of calling them on the phone, you’ll email them or text them, when you know they prefer to talk on the phone. Maybe you give them a hard time when they want to return an item because they are not truly satisfied with it. Maybe you forget to return a phone call or two.

A good exercise for you and your team is to put together a list of all the ways you can be “warm fuzzies” to your clients and then make sure each of your people is giving out at least one warm fuzzy a day to existing and potential clients (by nature we tend to provide more warm fuzzies to prospects than we do to paying customers).

A key for retaining customers, whether it be in good times or bad, is to be a “warm fuzzy” source for them. As David Sandler used to say, “People don’t get rid of their fuzzy sources.”

Do you feel like you’re in control right now? I don’t know anyone who does. So take a deep breath, and as a small business owner, take confidence in the fact that you’re one of the most adjustable people on the planet. The ones who have it tough are those folks who have a job. That’s all they really have confidence in, that they can do their job. Not that they can adapt and change with the times.

I’m on a bit of a Dave Matthews Band kick these days. I’ve been listening to their latest album (Big Whiskey & The Groo Grux King) on and off for the past couple of weeks. Dave has a way with words.

There are two sets of lyrics in a song called Dive In that caught my attention because they address this “out of control” feeling:

“One day do you think we’ll wake up in a world on its way to getting better
And if so, can you tell me HOW”

AND

“I have been thinking that lately the blood is increasing
The touniquet’s not keeping hold in spite of our twisting
Though we would like to believe that we are, we are not in control
Though we would love to believe”

The first set of lyrics that talks about “waking up in a world on its way to getting better,” strikes at a chord for what we hear on a daily basis from business owners. Everyone we talk with is hoping things will get better, but no one is really sure quite how that is going to happen.

It’s quite easy in times when you feel out of control to simply shut down. To over-think things to the point that you’re driven to paralysis. In tougher and more uncertain times, the last thing you want to do is become paralyzed with fear.

It’s easy to feel overwhelmed on a nearly daily basis with all the turmoil that is going on in the world. For many people, things they have taken for granted for decades are being turned upside down. And no one you talk to or listen to seems to have an answer that makes sense.

The key for you as a small business owner is to continue to plow ahead in search of answers to these questions. What you don’t want to do in these times is sit back on your heels and wait for something to happen to you. Most business owners we meet are in very strong positions to market their products and services. It’s just a matter of crafting that proper message and choosing the channel to distribute it through.

The lyrics about the “blood flow increasing” and the “tourniquet not keeping hold” brings visions of what’s been going on in the U.S. Banking industry over the past 18 months. No matter what the owners of these financial institutions try (and now what the U.S. Government is trying) nothing seems to be working to get the money flowing again (especially to small business owners).

The U.S. Government has taken some unprecedented steps to try to “fix” the current financial markets, but so far I’m not hearing anyone saying how that strategy is working so well on Main Street. This again goes back to the concept of being in control and wanting to believe we’re in control.

So how does all this boil down to your business? The first key is finding things that you can control and influence and focusing on those items first. For instance, while you cannot control someone making a decision to buy your products or services, you can control many things in your business when it comes to customers, including:

1. Your Marketing: this includes everything from which Target markets you will focus on to the Message that you deliver to that market to the Channels you utilize to deliver that Message. Your first job as the business owner is to help make sure that qualified prospective customers know about and come into contact with your business. It can be in-person, on the phone, walking into your location, sending you an email, etc.
2. Your Sales Techniques: this covers everything from the initial contact with your business to becoming a repeat customer. So, starting with the initial contact, how are people greeted when calling on the phone? Does the person answering the phone sound happy to be there or annoyed that the phone continues to ring? How long does it take your organization to respond to email or web site inquiries? How is someone greeted upon first entering your location? Are they greeted with a warm and inviting smile where they feel welcomed? When current customers contact your business, are they responded to quickly or do days and/or weeks go by before someone gets back to them? If you and your staff have no selling system and have never been trained in sales before, now might be a good time to start getting those systems and that training in place.
3. Performance of Your Products/Services: one thing we assume with most of our business coaching clients is that their respective products & services have a demand in the market. Usually they’ve been in business for several years or decades. What is good to do though is to make sure that your products and services are constantly being maintained and improved so your customers will continue to buy from you.

Again, the key here is to focus on what you can control, and not waste time and energy worrying about something over which you have no control. If you spend too much time focusing on things you can’t control, chances are you’ll be out of business sooner vs. later because your competition is focusing on what they can control.

So, how do you get comfortable when you realize you’re not in control? You have to have the confidence that you can adjust. If you don’t have confidence in yourself and your ability to adjust, then you’ll never have the confidence you’ll need to be successful.

One of the constants with any successful person you study is how often they change. Everybody changes and grows (whether they want to or not). So embrace the change. Make sure you’re the one who is making the choice to change instead of having it forced upon you by someone outside your business.

When you feel “out of control” the best thing to do is refocus on the things that you can control. The items I’ve highlighted above are just a few of the things you can control. Your attitude is something each of us can control. Like it or not, you choose every day you wake up what attitude you’ll bring to that day. Why not make it a positive and productive one? You may find out you feel more in control!

A great clarifying question to figure out if you Trust someone or if they Trust you is to ask, “Am I comfortable introducing this person to someone else and are they comfortable introducing me?”

At the end of the day, that’s what it all boils down to. And the answer to that question will be different depending on the person. For instance, I’d be comfortable introducing my partner Jack to anyone I Know, Like, and Trust (“KLT”).

On the other hand, there are folks in my Rotary Club who I would only be comfortable introducing to certain people. It’s not that I don’t Trust them. It’s just that the level of Trust I have with them is different from what I have with Jack.

So why is that and how do I maintain and/or increase the level of Trust I have with people?

Two of the best ways we have found to build and maintain Trust are:

Spend Time, and
Help

Since Jack and I spend a lot of time together and we help each other on a daily basis, we have a very high level of Trust. Certain folks in my Rotary Club I will see only once in a while and we haven’t done anything to help each other, so our resulting level of Trust is pretty low.

So what does it mean to Spend Time with somebody or to Help them? Let me give you a few simple examples.

Spending Time with someone can simply mean sharing a meal or a cup of coffee. It could mean sharing a hobby or extracurricular activity that you each enjoy (e.g. hunting, snowboarding, visiting a museum, golfing, etc.). Or it could be getting involved in the leadership or on the board of a service organization or a local non-profit that you both enjoy.

Chances are the reason you Know and Like someone is because you have a common interest or bond. So Spend Time with them on a regular basis doing one of those activities. At the very least you both have to eat right?!

Help can be as simple as listening to someone when they need someone to talk to about things. It could also mean introducing your KLT folks to each other. Why? Because chances are your KLT folks can help each other. But they have to Know each other first. Help also means saying “yes” when one of your KLT folks asks for your help. And doing it with a smile!

So what are you doing to build and maintain Trust on a daily, weekly, monthly, annual basis? If you’re not focused on this, you should be. It’s the #1 driver of success in your business.